LetsBuyIt.com Mounts a ComebackIn receivership and on the verge of bankruptcy five months ago, Dutch-based Pan-European Web merchant LetsBuyIt.com has raised 80 million euros (approximately $72 million) this year and concluded an agreement last month with Karstadt Quelle, a leading retail and mail-order group.
The company raised 50 million euros in February, enough to get out from under court supervision. It has raised another 30 million euros since then, most of it from Gem Group Equity's credit line.
That is enough to keep the company afloat through 2002, when it expects to turn a profit, said Richard Sunderland, a spokesman for LetsBuyIt.com. The Karstadt Quelle deal adds extra protection, since the German group has the option of taking an equity stake.
"At the moment the amount has not been decided," Sunderland said, "or even if they will take a stake, and it may not be in cash if they do. There are a number of options they could look at. They could provide services, for example, as the German TV channel ProSieben did when it swapped advertising slots for equity when LetsBuyIt first went online."
The stake, he said, definitely would not be enough for control.
The deal will allow the Web merchant to arrange a major portion of its purchasing volume through Karstadt Quelle, specifically involving goods from the multimedia, electronic equipment and sports and leisure sectors.
For Karstadt Quelle, the alliance should help it develop a better online presence. For all its size, the company has never managed to follow a coherent Web strategy.
LetsBuyIt took off during the dot-com boom with a co-buying strategy that allowed customers from different countries to bundle purchases to obtain a better price.
The approach drew 1.2 million customers, but the company expanded too quickly, operating in a dozen European countries in a matter of months and burning millions on marketing and advertising.
IPO funds were depleted quickly, and share prices on Frankfurt's new market plummeted. After the agreement with Karstadt Quelle was announced, shares rose 27 percent to 55 euro cents, a mark of how low they had fallen.
The company is clearly more careful now, analysts noted. It has opened Web sites only in Germany, the United Kingdom, France and Sweden. Sales last year totaled 38.2 million euros. Losses in first quarter 2001 were 15.2 million euros.